Question

The board of directors authorizes 1,000 shares, the firm sells 100 shares to employees, and IPOs 600 shares to the public. How many outstanding shares?

Answer 1

The number of shares outstanding is 700.

Step-by-step explanation:

Number of shares outstanding refers to part of the shares authorized by the directors of a company which are currently held or sold to the shareholders of the company including shared owned by the employees and other officers of the company and the shares held institutional investors.

Therefore, authorized shares is not part of the number of shares outstanding.

Based on the above explanation, the number of shares outstanding for this question can be calculated as follows

Number of shares outstanding = Number of shares sold to employee + IPOs shares sold to the public ................... (1)

Where;

Number of shares sold to employee = 100

Initial Public Offerings (IPOs) shares sold to the public = 600

Substituting the values into equation (1), we have:

Number of shares outstanding = 100 + 600 = 700

Therefore, the number of shares outstanding is 700.